When Stephen received an M&S voucher from his parents for Christmas, he did what many of us do: shoved it in his wallet and forgot about it. Months later, when buying a sandwich in the shop, he remembered he had it and handed it over.
“The cashier took it and, handing it back, said something like, ‘You still have £96-something on your card.’ I couldn’t believe it,” he says. “I continued to use it for incidental sandwiches for a further six months until it ran out. It’s the best Christmas present of my adult life – it just kept giving.”
Gift vouchers divide opinion: for some, they are a way to ensure someone can treat themselves to exactly what they want, when they want, and better than cash because they won’t end up being used to pay a gas bill. For others, they are a sign you didn’t have a clue what to get and had to make a panic purchase at the checkout.
Despite this, the industry is worth millions, and Christmas is boom time. Figures from the Gift Card & Voucher Association (GCVA) show that, in the second half of last year, just over £2bn worth of cards and vouchers were sold in the UK. More than half were bought by businesses – a recent trend has seen employers offer workers vouchers they can use in supermarkets and the like – but separate research for the association found that 33% of adults bought one for Christmas last year.
The GCVA disputes an old £300m figure that is often quoted as the value of unspent cards, but it is clear from companies’ accounts that there are balances left sitting on vouchers. This may sound like good news to retailers, but Alec Donald, of Edenred Payment Solutions, says that is not the case. Donald is a bit of a voucher expert, having spent almost a decade working for companies that run schemes for retailers.
“That unspent money has an opportunity cost,” he says. “A gift card can be an early touchpoint with a consumer – it may be the first time they’ve shopped with you. When they use it, they may spend more than the voucher.” He points to those for the cinema chain Cineworld – you may put the whole of the voucher towards tickets and splash out extra on popcorn or drinks.
Sanjay Aggarwal says that his independent spice business, Spice Kitchen, sees pros and cons in offering them. “They’re great for us in terms of cashflow, bringing in revenue upfront, and encouraging new customers to discover our brand. Often, customers spend beyond the card’s value, which also adds to our sales,” he says. “On the flip side, we do need to manage gift cards carefully in our accounts as a liability until they’re used, and set aside a small provision for redemptions.”
Every year, the Money Saving Expert, Martin Lewis, advises gift-givers to think twice before buying vouchers because they come with far more caveats than cash, but some people like to receive them.
Helen, a Guardian reader from Oxfordshire, says: “I’m happy receiving a voucher. I always feel pleasure in choosing a treat for myself, and a voucher implies a little more effort from the giver than just some cash to spend.”
If you are planning to give vouchers this Christmas, there are ways to do it well.
Put some thought into it
A common charge against gift vouchers is that they don’t show any thought – and, if you have just grabbed one from Tesco late on Christmas Eve, that may be a fair accusation.
Instead, think about which retailer or experience the recipient would appreciate, and how much money they will need to enjoy it. Giving someone a £5 voucher for a shop where most things cost £25 or more is not very thoughtful, unless you know that other people are doing the same.
One reader suggests giving vouchers for subscriptions or experiences the other person wouldn’t spend money on for themselves “as they think it would be too indulgent given their budget”, she says.
Most retailers offer the choice of a physical card or virtual versions. A tangible card may seem more thoughtful than sending the gift via email, but if you know your friend or relative doesn’t carry a wallet and loves to shop online, the opposite may be true.
Choose the right retailer
First, make sure your recipient has access to wherever they need to redeem the voucher. This is less of a problem than it was before you could shop online, but is worth investigating before you spend any money.
Among high street retailers, it is not so much of an issue, but there are quirks. Liberty, for example, has a standard gift card that can be used online, but if you want to give one of its beautiful gift coins, the recipient will have to visit its London shop.
It is a much bigger deal when you buy vouchers and cards for meals out or experiences. Several readers bemoaned experience vouchers that resulted in costs for travel and hotel accommodation in order to use them.
Check out locations to ensure the card can be used near where the person lives, or consider if you could host the recipient while they enjoy an experience near where you are based.
Another thing to note is how well a company is doing financially. If you have been reading that a company is struggling, then handing over money on the promise of goods at a later date is risky. Donald says “people have had their fingers burned” when the collapse of some retailers has been followed by administrators blocking the use of gift cards.
Sometimes, those decisions have been reversed once they assessed what stock the company had, or the brand was sold – when the Law Commission looked into this in 2016 it found that, in 15 insolvencies, vouchers were honoured as normal in seven cases. In two, they could only be used as part payment – at Borders in the UK and Australia, for example, shoppers had to buy something costing double the value of their voucher. At the other six, including Peacocks, Zavvi and JJB Sports, the vouchers were written off (although some of these businesses or the business names have since changed hands and continue to trade). Half a million Zavvi voucher holders lost a combined £4.1m – an average of £8.12 each.
Read the terms and conditions …
Small print is a big issue when it comes to gift cards and vouchers. Often, terms and conditions will be outlined on the back of a very small card, which makes them hard to read at the checkout. Instead of taking your magnifying glass to the shop, do your research online before you buy.
There can be exclusions around use. John Lewis gift cards, for example, can’t be used on partner sites such as waitrosegarden.com; Marks & Spencer’s cards can’t be used to buy its products through Ocado; and most retailers will not let you use them to buy stamps or another gift card, or at a petrol station.
One4all cards, which are sold online and at retailers such as Tesco and Morrisons and can be used at a wide range of retailers, are essentially prepaid cards, and come with some terms and conditions that most other cards don’t have. For instance, after 18 months a processing charge of 90p a month is applied until all the money is spent.
Again, it is experience cards and vouchers that warrant the closest look before you buy.
One reader, who didn’t want to be named, summed up some of the problems with them: “They are the most burdensome as they come with so many caveats that they are almost impossible to use. The ‘dark sky experience’ that would involve a three-hour drive with young kids specifically when it’s not cloudy. The afternoon tea for two that can only be used on Tuesdays to Thursdays between 2pm and 5pm, so you have to take time off work. The meal and a movie for two that can only be used in a cinema 50 miles away.”
The GCVA advises that you draw the recipient’s attention to the caveats. “All gift cards are subject to terms of use; let the receiver know where to find them (usually on the back of the card, packaging or on the gift card’s website). This will ensure they get the best out of your gift,” it says.
Check expiry dates
Not all cards and vouchers have an expiry date. Currently, Theatre Tokens can be used at any time; I recently found some that were 20 years old, and had to email to convert them into a digital code I could use online, but it was a straightforward and quick process.
At Ikea, there is currently no expiry date, and One4all has a five-year term on physical gift cards, but the money can be transferred to a new one after that time. National Book Tokens expire after eight years, but currently are replaced if there is a balance left.
Presently, Amazon has a 10-year deadline, but two years is the going rate among most retailers. The date period often resets when the card is used or the balance is checked.
Experience vouchers may have shorter deadlines, particularly if offered by small businesses, in part because they need to protect against having to honour them when the price could change.
Pay with a credit card
If you are spending £100 or more on a single voucher, make sure you use your credit card as this provides a backup if the retailer goes out of business – you can reclaim the money under section 75 of the Consumer Credit Act.
“The person who purchased the voucher has a claim because, in effect, that person has purchased goods which have not been delivered and no refund is possible because the retailer has gone bust,” says Gary Rycroft, a consumer lawyer and partner at Joseph A Jones & Co solicitors.
He says it doesn’t matter that the voucher itself has been delivered because “the credit card provider is jointly and severally liable for the goods purchased”. You have six years to bring a claim if something goes wrong. This applies if you bought the vouchers directly from the company that has gone into administration; if you bought it elsewhere (from a supermarket, say), you have broken the link between yourself and the retailer.
If you paid with a debit card, or spent less than £100, you may be able to use chargeback, but the rules are more limited and you have just 120 days from when something goes wrong to make a claim.
Do it yourself
One way to avoid onerous terms and conditions is to make your own vouchers. There are lots of templates online that you can adapt and print off, or you could draw your own.
Mary from Northumberland says she often receives vouchers from her adult children and is delighted to do so. Last year, though, she says “one of the couples actually gave me cash, but it was in four fancy envelopes labelled ‘for when you really need coffee and a cake when out on a walk’ or ‘for when a takeaway is just what you fancy’, etc. Brilliant idea. I loved spending them on naughty treats!”
And if you get one …
Spend it. “If you receive a gift card, remember that they aren’t something to put in the bottom of the drawer and saved for a rainy day,” says the GCVA. “They are there to be spent and enjoyed, so get out there, have fun and treat yourself.”
Stephen is proof that they can be a great gift to receive. “I’m now looking for sandwich or coffee gift cards to give others,” he says. “The feeling of having my sandwiches paid for for months was amazing.”
